Warren sees dark times if financial reform fails

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Elizabeth Warren paints a disturbing picture of the realities facing the United States and the Obama administration as Americans claw their way clear of the worst recession since the 1930s.

Lobbyists for the financial industry have put the kibosh on market reforms that would aid the recovery. Banks, saved from Tartarus by taxpayer money, are using a free government guarantee against failure to rebuild profits and credit ratings, while either not lending to business or trying to milk American consumers of every dime they’ve still got.

“That’s our plan to rebuild the American economy. Think about it,” says the bespectacled Harvard professor who chairs the Congressional Oversight Panel set up to investigate the $700 billion banking bailout.

“What the government is doing right now is, it’s permitting a set of rules that says, in effect: ‘Hey, banks. We will lend to you at zero and you go out there and figure out what you can squeeze out of every American family. No new rules’,” she told MSNBC.

Why have the rules not changed? “There are very powerful interests that believe that they can profit from keeping status quo.”

Warren is seen as a front-runner to head President Barack Obama’s proposed Consumer Financial Protection Agency. But the notion of a free-standing CFPA has emerged as a main obstacle to broader financial reform. Republicans fear such an institution could fall into the hands of people hostile to financial markets.

But if financial reform fails and the status quo remains?

Then the economic problems grow until they shake international confidence in the American economy and prompt other countries to wonder why they’re holding U.S. Treasury securities.

“We’re in a place right now where having pumped all this money into the financial institutions, their response has been to hold it,” Warren said.

“If we don’t have any jobs, if we’re not producing anything, if we don’t have any genuine wealth that we create, there’s a reason other countries are worried about holding our paper.”

“I’m not the politician,” she added. “I just know what needs to be done.”

No question we are doomed without true financial reform. Efforts to date have been laughable. The time to clean up Washington has come. No more lobbyists. No more career politicians; the greater good is not being served.

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David Morgan has covered news from Wall Street and Fleet Street to the White House, the Pentagon and Congress, including politics, macroeconomics, military affairs, corporate finance, U.S. intelligence, national security and the international markets. He has also reported from Atlanta on the rise of American conservatism, civil rights, homegrown terrorism and the Olympics, and helped chronicle the Sept. 11 attacks and their aftermath from Philadelphia, New York and Washington.